Bitcoin (BTC) falls down. Guilty: Coronavirus

2 min reading

Both the spread of the coronavirus to other countries as well as investors' fears about economic consequences resulted on Monday in sharp declines on the stock markets in the United States and Europe. The cryptocurrency market was affected too as Bitcoin's (BTC) value dropped 3.6% to USD 9,500. The cryptocurrencies that dropped the most in value are Tezos, Chainlink and Binance Coin, though.

The epidemic is spreading to traditional markets

The coronavirus, also known as COVID-19, has already been detected in 30 countries. It seems that its recent outbreak in Italy, along with the spread of the virus in Iran, South Korea, Bahrain and Kuwait, has forced investors and governments to reconcile with the possibility of the situation getting worse.

Yesterday the Dow Jones Industrial Average (DJIA), one of the companies' most important stock indexes listed on the New York Stock Exchange and NASDAQ, sharply retreated, dropping by 1024 points to 27 960. A sharp drop of nearly 3.6% is the worst correction the market has seen since December and February 2018. Withdrawing from the market negated all profits gathered by Dow in 2020.

The S&P 500 (SPX) recorded a similar situation, dropping by around 3.4% to 3225, while the NASDAQ 100 (NDX) fell by nearly 3.9%, stopping at 9079.

All European markets have also dropped significantly. The German DAX fell by around 4% yesterday, as did the British FTSE 100 and the French CAC 40. The Italian FTSE MIB, on the other hand, lost almost 6%.

The coronavirus, especially an Italian "expansion" of the virus, scared Polish investors too as they began selling shares. It seems that the strong drops did not miss the Warsaw Stock Exchange. WIG20 dropped by as much as 4.5%, which is the biggest daily decline since June 2016 when a postbrexit session took place. It is worth noting that a discount of over 4% is rare on the GPW, because it happened only twice over the past five years. Moreover, for the first time in 3 years WIG20 fell below 2,000 points (currently it is only 1956).

The analysts are concerned that today's rapid decline may be the beginning of a stronger correction that could equal as much as 10-15%. The reason may be that mass quarantines in a great number of large Chinese cities are expected to negatively affect markets and international trade.

Jim Kramer, the host of CNBC Mad Money explained that shares are now "too toxic to touch" which is a consequence of the fact that the US companies are too dependent on China's production.

"I need to emphasize, again, that the big risk from the coronavirus outbreak has to do with interrupted supply chains and a concomitant business slowdown worldwide."

The whole cryptocurrency market in red Bitcoin (BTC) drops by 3.6%. XTZ, BSV and BCH rapidly drop.

A lot of cryptocurrency supporters believe that digital assets are inversely correlated with traditional markets. While having an opinion like that they often suggest that investors, scared of volatility in traditional markets, tend to gather digital assets.

Approximately $13.5 billion has evaporated from the cryptocurrency market since yesterday, which is a decline of nearly 4.7%. As a result, market capitalization fell to $276.6 billion.

The leading cryptocurrency, Bitcoin (BTC), has dropped 3.6% from yesterday's highs of over $9,950. Currently, the BTC price is only $9,589.

The top altcoins were not omitted by the declines either. All of the 30 largest cryptocurrencies are red today, a situation similar to yesterday's session.  Tezos and Chainlink are losing the most today when compared to the cryptographic assets with the largest capitalization, by 9.2% and 8.8%, respectively.

Binance Coin (-6.3%), Bitcoin SV (-5.8%) and Bitcoin Cash (-5.1%) also fell in price.